South Africa: Do You Need The Minister’s Consent To Take An Option To Purchase Agricultural Land?

Section 3(e)(i) of the Subdivision of Agricultural Land Act (the
Act) provides that agricultural land shall not be sold or
advertised unless the Minister has consented to it in writing.
There are currently conflicting judgements as to whether this
provision applies to an option to purchase agricultural land.

In Colchester Zoo SA Investments (Pty) Ltd v Weenen,the
KZN High Court held that the definition of "sale" in the
Act included options to purchase and consequently, unless the
Minister's consent was obtained, the option to purchase would
be invalid.

This is wholly opposed to the decision given four years earlier
by the Free State High Court in Westraad NO v Burger. The
Court held that an option to purchase cannot be read into the
definition of "sale" given by the Act and thus the
Minister's consent is not required when concluding an option to
purchase.

It would therefore seem that in KZN the Minister's consent
is required to conclude an option to purchase agricultural land,
while in the Free State, the Minister's consent is not
required. This is obviously an untenable situation since the Act is
national legislation and should be applied to all provinces in the
same way.

The most significant impact stemming from the two conflicting
judgements is that it leaves those persons already party to an
option to purchase agricultural land agreement without the
Ministers consent, in doubt as to the validity of their option
contracts. Clarity on this subject is important since it can take
up to two years to obtain consent from the Minister and whether it
is necessary to go through this timeous process will obviously
impact the decision to enter into the option contract at the
outset.

The question that naturally occurs when there are conflicting
judgements is which judgement is correct and which one will be
followed in the future?

The Free State High Court in deciding that the definition of the
word "sale" does not include an option to purchase
interpreted the provision using the literal and common meaning of
the definition of "sale" found in the Act. It would seem
that the KZN Court relied on the intention and objective of the Act
in interpreting the definition of "sale." Therefore two
differing styles of interpretation resulted in the two opposing
judgements. Not to mention that the Colchester decision,
four years after the Free State Westraad decision, took no
cognisance of the earlier Westraad decision.

The Supreme Court of Appeal (SCA) has since indicated which of
the two forms of interpretation, the intention of the legislation
or the literal common meaning of words in legislation, is more
preferable. Natal Joint Municipal Pension Fund v Endumeni
Municipality warned against using terms such as
"intention of the legislature" when interpreting
statutes. It held that looking at the intention of the legislature
moves away from interpreting legislation and rather turns a
court's attention to enquiring into the mind of the
legislature. The SCA rather urged judges to look at language and
context when interpreting statues. This is in line with what has
long been held as the "golden rule" of interpretation-
adherence to the plain words of the statute unless it would result
in absurdity.

The language used to define "sale" in the Act is
brief, specific, to the point and free from mention of options to
purchase. Further, it must be remembered that an option to purchase
is not a conditional sale of land. The sale only comes about when
an option to purchase is exercised. Until that option is exercised,
there is no actual contract of sale and thus the section requiring
the Minister's consent should not be applicable.

It would seem that on the principles of interpretation laid down
by the SCA, courts should follow the precedent set out by the Free
State High Court in the Weenan decision, allowing for an
option to purchase agricultural land without the Minister's
consent.

It should be kept in mind that although the Minister's
consent is required to register a servitude in
respect of agricultural land, (subject to certain exceptions), the
two conflicting judgements have no effect on the granting of
options to acquire servitudes as servitudes may be granted (but not
registered) without the consent of the Minister.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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